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My wife and I are about to have our chapter 7 creditors meeting next week. The vehicle we have is a horrible loan I got after a previous repo years ago: 2006 Ford escape that now has 150k miles. The loan is $9,000 at 19% with 3 years left. I need to have a reliable vehicle as I work 45 miles each way, so "beater with a heater" won't cut it. I want to focus my search because right now it is all over the place;
My circumstances that effect my car choices:
My score atm (albeit via creditkarma. I plan on getting myfico this week so I can check my score pre and post discharge) is TU: 567, EQU: 543. My plan is to hold off as long as possible, continuing to pay my current car payment (never missed one in over 2 years through 2 vehicles with this same place) then go to my credit union towards the end of June to start applying for credit. Based on what I have read, I am thinking I should be able to get an interest rate very close to 10%.
Am I close? or am I going to be severely disappointed.
Oh, and as everyone else says in their OP: this place is an amazing wealth of knowledge. thanks ahead of time to all of you!
Total CL: $321.7k | UTL: 2% | AAoA: 7.0yrs | Baddies: 0 | Other: Lease, Loan, *No Mortgage, All Inq's from Jun '20 Car Shopping |
I am pretty much ready for that as well (not sure the wife is though). This makes the "reliably cheap" car where I can plunk down 50%-ish enticing: even if I am still stuck with a 15% rate, as long as I am only financing no more than, say, $4k, that should keep my payments to where I can pay it off without losing too much value on the vehicle. I can then either keep it as a work vehicle and get a good rate in a year or so on a new family car/for my wife.
I guess the conundrum I am faced with is: am I going to wind up going through the hassle of car dealerships only get a slightly better vehicle at a silightly better rate? My lawyer said they would try and work with my current finance company as part of the affirmation, so if they miraculously knock like 12% off my existing rate, I am in a way better situation except for the fact that this vehicle is old for a 2006 and I've already put 50k miles on it.
I am assuming you are surrendering your vehicle which I think is a terrific idea. In a Bk 7 you dont have to surrender until the end of the process (usually). I mention this to say hold on to it as long as you can legally do so. You will get a much better interest rate when you have your discharge in hand. If you finance something before your discharge the rates are much, much worse.
The reason I recommend a beater with a heater is because your score improves dramatically within a month or two or six, depending upon your actions, and if you can work through that short time after the discharge you can end up with an extremely low rate. Read some of the stories in the Rebuilding Your Credit section and you will see some very attractive rates after Bk after a relatively short rebuild period.
@StartingOver10 wrote:I am assuming you are surrendering your vehicle which I think is a terrific idea. In a Bk 7 you dont have to surrender until the end of the process (usually). I mention this to say hold on to it as long as you can legally do so. You will get a much better interest rate when you have your discharge in hand. If you finance something before your discharge the rates are much, much worse.
The reason I recommend a beater with a heater is because your score improves dramatically within a month or two or six, depending upon your actions, and if you can work through that short time after the discharge you can end up with an extremely low rate. Read some of the stories in the Rebuilding Your Credit section and you will see some very attractive rates after Bk after a relatively short rebuild period.
I have been under the impression that having diverse types of credit is a quick way to build credit, as long as it didn't make debt/income ratio skyrocket, so I figure a small loan that I can easily pay back fast would be the best bet when paired with a starter secured card. Even better if it gets me twice the quality in vehicle that also won't lose too much value by the time I am able to have it paid off. Plus, if times are tight and I can't pay 3x the payment, I can still pay what is due without being enticed back into old habits of puttin bills off when inconvenient.
Am I missing something? I bet I am because there is a lot to take in and finances are not exactly my forte (obviously).
@Anonymous wrote:
@StartingOver10 wrote:I am assuming you are surrendering your vehicle which I think is a terrific idea. In a Bk 7 you dont have to surrender until the end of the process (usually). I mention this to say hold on to it as long as you can legally do so. You will get a much better interest rate when you have your discharge in hand. If you finance something before your discharge the rates are much, much worse.
The reason I recommend a beater with a heater is because your score improves dramatically within a month or two or six, depending upon your actions, and if you can work through that short time after the discharge you can end up with an extremely low rate. Read some of the stories in the Rebuilding Your Credit section and you will see some very attractive rates after Bk after a relatively short rebuild period.
I have been under the impression that having diverse types of credit is a quick way to build credit, as long as it didn't make debt/income ratio skyrocket, so I figure a small loan that I can easily pay back fast would be the best bet when paired with a starter secured card. Even better if it gets me twice the quality in vehicle that also won't lose too much value by the time I am able to have it paid off. Plus, if times are tight and I can't pay 3x the payment, I can still pay what is due without being enticed back into old habits of puttin bills off when inconvenient.
Am I missing something? I bet I am because there is a lot to take in and finances are not exactly my forte (obviously).
Actually - debt to income ratio is not part of the scoring models. It may effect how much you can borrow, but not your scores.
I would suggest opening a SDFCU account, and doing a SMALL secured loan and credit card ($500 will get you both), do it right after the BK is discharged.
@Anonymous wrote:
@Anonymous wrote:
@StartingOver10 wrote:I am assuming you are surrendering your vehicle which I think is a terrific idea. In a Bk 7 you dont have to surrender until the end of the process (usually). I mention this to say hold on to it as long as you can legally do so. You will get a much better interest rate when you have your discharge in hand. If you finance something before your discharge the rates are much, much worse.
The reason I recommend a beater with a heater is because your score improves dramatically within a month or two or six, depending upon your actions, and if you can work through that short time after the discharge you can end up with an extremely low rate. Read some of the stories in the Rebuilding Your Credit section and you will see some very attractive rates after Bk after a relatively short rebuild period.
I have been under the impression that having diverse types of credit is a quick way to build credit, as long as it didn't make debt/income ratio skyrocket, so I figure a small loan that I can easily pay back fast would be the best bet when paired with a starter secured card. Even better if it gets me twice the quality in vehicle that also won't lose too much value by the time I am able to have it paid off. Plus, if times are tight and I can't pay 3x the payment, I can still pay what is due without being enticed back into old habits of puttin bills off when inconvenient.
Am I missing something? I bet I am because there is a lot to take in and finances are not exactly my forte (obviously).
Actually - debt to income ratio is not part of the scoring models. It may effect how much you can borrow, but not your scores.
I would suggest opening a SDFCU account, and doing a SMALL secured loan and credit card ($500 will get you both), do it right after the BK is discharged.
You're right, my mistake. I was confusing it with credit/debt ratio (of which is currently negative for me since I have zero credit but tons of debt). Thanks for pointing it out and clarifying.
Thanks for the tips. I've actually been looking at some older Camry's with 100k+ at around $5-6k and it seems like I can get a decent vehicle that should last a lot longer than I need it to (with proper maintenance)
@Anonymous wrote:Thanks for the tips. I've actually been looking at some older Camry's with 100k+ at around $5-6k and it seems like I can get a decent vehicle that should last a lot longer than I need it to (with proper maintenance)
^^Excellent! This gives you time to get on your feet after you get your discharge